One year at Coinbase. Check!

Jacob Goren
Nov 6 · 4 min read

They say crypto’s changed. They wanna know how I feel about it:

[BLOCKCHAIN / TECHNOLOGY]


  1. A blockchain is a new and fundamental computer science solution to today’s entrenched, centralized institutions like banking and brokerages that unfortunately require public trust to operate. Blockchain is designed to perform as a Decentralized + Trustless data structure to overcome those inherent risks in the current system.
  2. Public blockchains therefore need a crypto asset that incentivizes people to protect the network through ‘staking/mining’.
  3. Blockchain 1.0/2.0 are slow and can’t scale (Bitcoin, Ethereum). Faster blockchains (3.0) or layer 2 solutions will soon be the mainstream.
  4. However, mainstream will mostly be invisible to the average person. Imagine a mobile application like Paypal/Venmo with unseen blockchains with crypto-rails underneath the hood.
  5. Proof-Of-Work is wasteful in terms of energy. So, Proof-Of-Stake could be the prevailing consensus mechanism moving forward, but it doesn’t have the 10-year track-record of BTC to deserve that verdict quite yet.
  6. Crypto will be both a lot faster and a lot slower to evolve into the mainstream. Most users of the web started using it only recently (in the last decade). Think of the internet’s evolution: ARPANET -> INTERNET -> DIAL-UP -> AOL -> BROADBAND -> 4G/WIFI/SMARTPHONES -> IOT. The crypto economy is only getting started.
  7. Stable coins (Examples: USDC = Coinbase; Libra = Facebook) are the new digital assets that are ~ $1 and backed by real-world money (EUR,USD,YEN,etc). A person will use stable coins (5 libra or 5 USDC) to pay for their coffee. But never a non-stable coin like $5 of bitcoin. It is likely that mainstream crypto users will only use stable coins to move money around online.
  8. DeFi (Decentralized Finance) has evolved into the prevailing use-case for smart contracts (compound.finance, makerdao, dydx). However, smart contracts are so nascent, that we have very little idea how smart contracts will be used in the upcoming decades.
  9. If, and when, tokenizing real-world assets or securities (property, deeds, stocks, etc.) becomes normalized in business, the result will be less inefficiencies and overhead, but at the cost of many more lost jobs (Escrow will be code, Insurance will be code, Lawyers will be code, etc.)

[BITCOIN]


  1. Bitcoin proved a concept (sovereignty through math, stateless value for humanity). Its ultimate success is uncertain as it continues to morph its use case. It has already gone through the following phases: Electronic Cash -> Payment Network -> Digital Gold -> ?.
  2. Bitcoin is arguably valuable because of 1) Digital scarcity through its math & software, 2) No central authority that can print more than the software distribution limit of 21 million, 3) The value that people ascribe to it around the world, which drives its supply/demand.
  3. Bitcoin is not a ‘get rich fast’ scheme. It is a ‘not get poor slowly’ mechanism to hedge against state monetary policies that can print money indefinitely and cause dangerous inflation.
  4. Bitcoin is pseudo-anonymous, but actually very trackable for the IRS and governments. Satoshi Nakamoto’s (anonymous creator of Bitcoin) mission was to protect you from the banks, not from the law. You will get caught doing illegal transactions. On & Off fiat ramps all have AML/KYC.

[POLITICS]


  1. Digital state crypto-currencies pegged 1:1 with fiat are inevitable.
  2. The U.S. government will continue be fearful of Facebook Libra and ban them
  3. Then China will release a Digital Yuan
  4. Then the US will be fearful of missing out (FoMo) and run back to Facebook (or Coinbase USDC) for help.

[ECONOMIC FREEDOM]


  1. Not your keys, not your crypto! It is a difficult but rewarding experience to own your own wallets. Some people should use custodial wallets (like Coinbase) and shouldn’t trust themselves to protect their private key / passphrase. DYOR, understand the risks and benefits.
  2. The power of crypto is a double-edged sword. On the cutting-edge side, everyone can be their own bank and store all their wealth on a $15 smartphone, but also there is no way to recover your crypto if you lose your keys if you engage in self-custody. NO ONE CAN HELP YOU!
  3. On the safe side, crypto self-custody is the first time the unbanked/underbanked have access to a way to build intergenerational wealth without access to 1st world financial products.
  4. Also, on the good side, if we must walk across the border empty handed for some reason, government’s cannot seize our wealth if we can memorize 24 words…
  5. Identity through blockchains is a great idea. But it has the same existential issues as losing our keys and prove who we are. If we can’t replace a central authority to reissue us a private key to prove our identity, then the use-case is broken…

Disclaimer:

These are the thoughts of Jacob Goren, not his employer. This is not financial advice. Crypto is still an experiment and its ultimate worth is uncertain. Only use speculative digital assets if you understand the risk.

References:

https://compound.finance

https://dydx.exchange/

https://libra.org/en-US/

https://www.coinbase.com/usdc

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